Rupee Internationalization Report: The Reserve Bank of India has said that it will study the report of the Inter-Departmental Group regarding the internationalization of the Indian currency Rupee. RBI has uploaded the report on its website. However, the RBI has told the things and suggestions made in the report regarding the internationalization of the rupee as the opinion of the Inter-Departmental Group. RBI says that it has nothing to do officially with this report.
The RBI had constituted an inter-departmental group under the chairmanship of Radha Shyam Ratho, Executive Director, to consider the internationalization of the rupee. The purpose of forming this group was to ascertain the place of rupee as an international currency as well as prepare a roadmap for internationalization of rupee. Has submitted the report containing its final suggestions to the Inter-Departmental Group.
In view of the recommendations of the Inter-Departmental Group on Rupee Internationalization, the Committee has recommended that invoicing, settlement and payment for bilateral and multilateral trade should be done in rupees and local currency. The committee has recommended setting up of the rupee as an additional settlement currency in existing multilateral mechanisms such as the ACU. In addition to local currency in bilateral transactions, it is recommended to promote trade in local currency with counterparty countries.
The inter-departmental group has suggested extension of opening of rupee accounts for non-residents in India or abroad. It has also been suggested to integrate the Indian payment system for cross border transactions. The committee has emphasized on strengthening the financial market to promote the global 24*5 rupee market and also suggested to promote making India a hub of rupee transactions and establish it as a better price discovery. It has been suggested to give incentive to exporters for settlement of trade in rupees.
The Committee has suggested a review of the tax on Masala Bonds in the medium term. International use of RTGS for cross border trade transactions and inclusion of Rupee as direct settlement currency in Rupee CLS (Continuous Linked Settlement) system has been suggested. Also, the committee has recommended making banking services available in rupees in off-shore branches of Indian banks abroad.
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